Commentary on Radio & Audio

January 2008

January 08, 2008

I'm trying hard
not to be one of those old salts who is living in the past, wishing
the "good old days of radio" would return. Yes, there are
elements of the past that radio can learn from, but if radio returned
to the old ways of doing business, we could not succeed in this
fast-paced world of digital media. The key to our success will be
reinvention and reinvigoration, which are relevant to today's society
and to advertisers. Radio remains strong in many ways, but seven
years of negative growth on Wall Street have not helped, nor has the
recent news of the 6 percent drop in radio advertising in November.
Of course, not all radio is about Wall Street and what one reader of
ours calls "the radio elite."

In this industry
that I love passionately, I am seeing trends that I do not like: Some
of radio's best managers and sales managers are resigning over
proposed 2008 budgets that cut down to the bone and that they simply
want no part of, and some of radio's best are being pushed out by
executives who think non-radio people can do better. These group
executives are not bad people; they are simply under enormous
pressure from investors to solve their problems.

Who Broke A
Mirror?Radio's seven
years of bad luck seem to be continuing. We should be investing in
our product, yet it's the worst possible time to do so. With economic
indicators signaling bigger problems, advertising -- at the end of
the food chain -- is usually the first cut made. Although radio
sometimes benefits in a recession from advertisers that cannot afford
television and move their budgets to lower-cost radio, sadly, many of
those advertisers have been seduced by new media and are moving away
from traditional media altogether.

I Refuse To
Accept FailureWhat about you?
During the last major economic downturn, Mel Karmazin told his staff
at CBS that "recession is not an option" and continued to
lead his company with the mindset that failure was unacceptable. It
worked -- and while others stumbled, CBS held its own. I believe that
each of us must make a personal commitment that, no matter what it
takes, we will not allow our medium to decline. We will work harder,
smarter, and more passionately than ever.

Human
DecencyA decent human
being would not abandon a spouse if he or she contracted cancer. Just
as your care and attention are needed for a sick family member during
a challenging time, your devotion to radio is needed now -- no matter
how great your frustration level with your employer. You are not
alone. If you got into radio because you love it, garner the devotion
to fix it. Mounting pressure has detracted from radio's fun
atmosphere, but solving our industrywide sales problem will relieve
that pressure. You are valuable and you are needed now.

The Power
Of OneChange always
starts with one person who is bold enough to try one idea. Your one
idea may be the catalyst that will change the radio industry. Ed
McLaughlin's vision for Rush Limbaugh was that one idea that saved
the dying AM radio band. One idea. Commit to trying new initiatives,
even in the face of bold disagreement. Radio needs your innovation
now.

Eight
Promises To RadioDon't assume that
you cannot change the entire industry. Each of us can make a huge
difference, including you. We each need to own the problem, to take
on the problem at our personal level, and to experiment boldly. Here
is what I am doing personally:

1. I have
directed my editorial staff to publish your bold ideas in Radio
Ink.
I encourage any industry professional, in any size market, to share
your vision with the entire industry in hopes that they, too, will
try your initiatives. Submit your ideas to Editor-in-Chief Joe Howard or to me. We want to follow
your progress as well, so please keep us posted as ideas develop.

2. I've asked our
editors to gather station success stories in all areas -- sales,
promotions, marketing, etc. -- to disseminate practical and
profitable ideas from around the country (and the world). This
industry has a bad habit of not sharing successful ideas. This must
change. We're all in this boat, and this is not a time to be focused
on self. We will publish these success stories as you share them.

3. I'm sick and
tired of radio stations selling against one another. It's one thing
to compete; it's another to try to destroy the reputations of others.
If it is happening in your market, I want you to phone me and give me
specifics. I will personally call the individuals conducting
themselves this way to tell them why they are hurting themselves and
radio. Furthermore, I will phone their boss, their regional manager,
and their group head. This must stop. And, if my lawyers tell me I
can do it without litigation, I will publicly embarrass those who
commit this cardinal sin. I need your commitment that 2008 is the
year where we will build radio together as an industry and not tear
one another down.

4. I will
personally offer my time to assist any company that feels it is at a
loss over what to do. I will take a proactive approach to meet with
the heads of radio companies to offer a fresh perspective on their
businesses. Frankly, these people are eminently more qualified than I
am when it comes to running radio companies, but a fresh perspective
might prompt an idea or two.

5. I will be your
messenger. If you feel your company is conducting itself badly, if
you see clear mistakes being made, if you have a better way that you
are convinced will help your company or your stations, if you are not
being heard or fear that you might lose your job for offering
suggestions, I will send the message on your behalf. You can e-mail
me anonymously and tell me to whom you want your message directed, or
you can e-mail me with your name, which I will keep confidential if
you ask me to. I will make sure the group heads see your responsible
suggestions.

6. The GM of our
conference division has been instructed to pack the content of our
conferences with even more practical, usable ideas. No fluff! I've
instructed her to make sure that each speaker, moderator, and
panelist is focused on solid, usable, moneymaking action items that
are relevant to your needs, no matter what your market size or
conditions. You'll leave with a list of action items you can
implement at home the next day. Our upcoming conferences include:

7. At our
Forecast Conference last month in New York, every group head
emphasized the critical need for innovative ideas on how stations can
make money in digital media. We've been told by countless market
managers that they have been given high interactive budgets and they
have no clue how they will meet them. With this specific goal in
mind, I have designed our upcoming Convergence conference to do two
things: 1) show you what is working and how it's being done (for
example, one small-market station generates $600,000 in local
interactive revenues, which exceeds its on-air billing) and 2)
stretch your brain and make you uncomfortable by exposing you to
things happening in Silicon Valley that you need to understand to
build your station's interactive strategy to a new level. This
conference is critical for managers, sales managers, and PDs -- not
your interactive people. As a manager, you must not delegate this
until you understand it fully. I've asked that every session have
strong, income-generating action items.

8. I've asked Roy
Williams to come out of hiding and conduct just one more conference
for us. He has agreed to conduct a full-day, invitation-only
conference at his private compound in Austin. I've asked Roy to
create a special emphasis on building radio in recessionary times and
a radio survival strategy. This conference will focus on solving
radio's problems at a local level. If you wish to be invited, let me
know. I think we can only accommodate 125 or so people.

THE FIGHT OF
RADIO'S LIFE"Small
plans do not inflame the hearts of men." -- Napoleon

Radio is
surrounded by companies and technologies that want to steal our
audiences and our advertisers. Will you let your competitors take
them away, knowing they may never return? This is the fight of our
life. This is not just about a dip in business, this is about a
change in society, driven by technology. It's the perfect storm, as
technology meets over leveraged companies with pressure to reduce
expenses while the economy is suffering.

Radio is not only
a viable medium, it is critical to the people in our towns across
America. Perhaps our listeners are flirting with iPhones, digital
media devices, and satellite radios, but every ear will be glued to
your station when disaster strikes. But we need people glued to us
daily. Radio needs to be relevant to communities and individuals at
every level, at every station, no matter the format. Your station
needs to be compelling now, because compelling radio cannot be
touched by any competition. Listeners will only leave if we drive
them away by not understanding and meeting their needs. Some in our
industry are meeting those needs and reaping the rewards. Others need
to become relevant and compelling again.

With your bold
thinking, 2008 will be the year we reclaim radio.

It's time for big
ideas, bold moves, and true revolution in our industry. It's up to
you, not someone else. Are you in?

It's painful being on the other side of the desk. Because I have a
passion for radio and I want radio to succeed, it's hard to see radio
people failing. As I've mentioned before, I handle the marketing for a
friend who owns a local business. In the year we've been advertising,
we've used only one radio station -- and business is soaring. We're now
on two stations in the same chain, with double the budget.

During the past year, the business owner and I between us have
received only one phone call from a rep at another radio station. A
year on the air, and only one other station has phoned to try to get
our business.

What's wrong with this picture?

That call was today, from a young, nervous-sounding AE:

Rep: Mr. Rhoads, my name is Joe Salesguy, and I'm from K123.
Me: Yes?
Rep: I spoke to your client, and he told me you handle his radio.
Me: Yes?
Rep: I wondered if you had considered K123.
Me: Nope.
Rep: But K123 is number one in the market.
Me: It is? Really?
Rep (pause): Well, with adults 45-plus.
Me: So....
Rep; Well, I wondered if you would like to change stations or consider K123.
Me: No, thank you.
Rep: But we have the XYZ Sports Team and all these sports packages.
Me: So?
Rep: So you're not interested?
Me: No, thank you.
Rep: Is it OK if I send you a media kit?
Me: No, thank you. Don't waste the postage. I'll just throw it away.
Rep (flustered): But ... you don't want a media kit?
Long pause.Rep: But we're number one.
Me: No, thank you.
Rep. Ah. Oh ... OK, thanks. Goodbye.

I was not unkind, but I was playing coy because I wanted to know
how the salesperson -- who sounded to be around 20 -- would respond. I
wanted to know what it's like to be on the client side, and get
pitched.

This kid's sales manager should be shot for sending a rep out on to
the street with no preparation whatsoever. He had no engaging
questions. He did not ask me what I was trying to achieve. The only
answers he had for me were about features, not benefits. He pushed
features -- and I don't care about features. Little did he know that I
have more budget to spend. He never asked.

This poor kid will probably be fired for not getting results, and it's not his fault. It's his boss's fault.

Clients care about one thing: results. Engage me. Speak my
language. Do your homework before you call. Find out my needs, my
issues, my frustrations, my vision. I don't care if you're number one.
I don't care who you have on the air or the reach of your transmitter
or the size of your audience. Solve my problem, and my money is yours.

In 1987 I acquired a floundering radio publication called the Pulse of Broadcasting. In
retrospect, I'm not exactly sure why I purchased it. I knew nothing
about the publishing business, and my losses in the first few years
proved it.

However, my goal was clear: to publish the magazine for
radio. So, I began implementing changes to develop the industry
magazine I wished for during my days as a station owner and manager.

During my first two years in publishing I worked unbelievably hard,
yet I could barely get any advertiser or reader attention. In a move of
desperation -- and to overcome some serious image issues created by the
previous management team -- I changed the name of the magazine to Radio Ink.

We were in the black within two years.

PATIENCE
The Japanese have a term that translates to patient capital.
Sometimes start-ups catch on quickly, and sometimes they take time. Had
my board of directors insisted on profitability within the first year
or two, Radio Ink would not be the heritage brand it is today.

Heritage station KFOG is celebrating 20 years on the air in San
Francisco, yet they too struggled at the beginning. The station barely
survived its first two years due to weak audience numbers and lack of
advertising support. Station personnel were recently heard on air
discussing the reality that KFOG would not succeed as a start-up today.
Fortunately, the original owners correctly believed time would work to
their benefit.

Streamline Publishing, the company I own, launched the fine art magazine Fine Art Connoisseur about
four years ago. Many companies would have killed it for non-performance
in the first two years, but in that market advertisers and readers need
time to develop trust. Time and consistency have been key factors, and
we are now enjoying our highest-billing issues ever.

TIME
The lack of time allotted to develop listener and advertiser trust
is a major detriment to the radio industry. Similarly, in a recent
editorial I noted that some of the best radio salespeople I've known
would never have made the 90-day cut if they were starting in radio
today. The same holds true for managers and program directors as well.
And few radio stations or formats that have enjoyed long-term success
were built in a year. Yes, there are instant successes such as the
Adult Hits (Jack, Bob, Ben) format, but its long-term viability remains
to be seen.

Though I can appreciate the need for public companies to satisfy
Wall Street, if the Street had been breathing down my neck during
either Radio Ink or Fine Art Connoisseur's earliest days, I would not have been afforded the time to nurture an up-and-coming heritage brand.

I have turned down every offer to head a public company because I
don't want to be punished after every quarter when I cannot answer the
question "What have you done for me lately?" to the satisfaction of the
market.

Maybe radio isn't cut out to be public. The tide certainly seems to
be shifting away from it. Regardless, radio simply must do a better job
of communicating to its critics that some things done well take time.
Patience and time are the best ways to build customer loyalty and
trust; and once you have them, they're difficult to lose.

"Actions speak louder than words," says my wife, Laurie. "You can
tell me you love me all day long, but when you show me by your actions,
I know you really do love me." With family, showing your love starts
with devoting time. It's true in business, too. Do you show your
salespeople that you love them?

Somewhere along the line, we got the idea that salespeople are
expendable -- that if they don't perform quickly, or if they slip below
budget, they should be terminated. Meanwhile, everybody complains about
how hard it is to hire and retain great people.

The radio-sales meat grinder goes something like this: Hire them,
hand them a training book or tape, put them on the streets, and give
them 90 days to sink or swim. Most sink.

First we have to look at the level of people we bring in. If you
pay peanuts, you get monkeys. In theory, higher-grade people -- who cost
more -- will perform better and return your investment sooner.

Then, we should consider the person's selling style. One of my
salespeople closed very few sales in his first six months. But we saw
that he was relationship-driven, so we didn't fire him. Within the
first year, he'd brought in more business than we could ever have
expected -- and 20 years later, he's still with us. Had I fired him in
those first 90 days, I would have lost one of the best people I have
ever worked with. If selling is indeed about relationships, how many
great relationships can be built in 90 days?

WHAT YOU OWE SELLERS
If you hire me as a seller, you owe it to yourself to help me be
successful. You owe me opportunity, training, a job description, and a
product to sell.

Most stations don't have job descriptions for salespeople. One
manager told me: "Of course we do. Their job is to sell. Period." No! A
salesperson's job is multi-faceted: building relationships,
prospecting, delivering the station value proposition, maintaining the
station's image to the clients, servicing business, managing the
creative development of commercials, and closing deals.

"I cannot invest in training until they prove themselves," one
manager told me "That guy was a terrible seller. I'm so glad I didn't
waste any money training him." That manager should be taken out behind
the station and shot for stupidity. Does an airline pilot receive
training only after he makes it from San Francisco to New York?

Before you fire salespeople for non-performance, ask yourself: Did
I provide them with the tools they need? Did they have a job
description? Did they follow it? Is the failure their fault?

Also, think about this: How much time do you spend with your
salespeople? Your radio station's success relies on a handful of
people, but they often receive minimal time from management. Managers
and sales managers are loaded with shuffling paperwork, watching
inventory, and dealing with clients and other departments. One
consultant told me he secretly tracks the time that he sees the sales
manager spending with sellers. The average per day for all sellers is 42 minutes.

If you have a sales problem, ask yourself: I am showing them the
love? Am I giving my time, attention, training, and respect? Am I
beating on them, hoping they will do better, when they don't know how
to do better? Am I pushing good people out because they're taking too
long to succeed?

Of course, we have to push for results, and at some point we have
to end our relationship with non-performing people. But first we owe it
to them, and to our success, to make sure we have shown them the love
with our actions, not just our words.